Bar No. 0855
Seventh St., 2nd
Vegas, Nevada 89101
for the Debtor
Bar No. 7417
Warm Springs Rd.
Vegas, Nevada 89120
for Petitioning Creditor Cane Clark LLP
STATES BANKRUPTCY COURT
DIVERSIFIED INVESTMENT, LTD.,
JOINT PLAN OF
Secured Diversified Investment, Ltd. (“SDI”), jointly with petitioning creditor
Cane Clark, LLP, hereby proposes the following Plan of
AND CONSTRUCTION OF TERMS
1. Definitions. In
addition to such other terms as are defined in other Sections of this Plan, the
following terms (which appear herein as capitalized terms) shall have the
meanings set forth below, such meanings to be applicable to both the singular
and plural forms of the terms defined. A term used in this Plan and not defined
herein or elsewhere in this Plan, but that is defined in the Bankruptcy Code has
the meaning set forth therein.
2. Administrative Claim
means a Claim to the extent that it is of the kind described in section 503(b)
of the Bankruptcy Code and is entitled to priority under section 507(a)(l) of
the Bankruptcy Code.
3. Allowed means, with
reference to any Claim or Interest, (a) any Claim or Interest allowed: (i) by
Final Order of the Bankruptcy Court, or (ii) as to which a proof of Claim has
been timely filed in a liquidated amount with the Bankruptcy Court pursuant to
the Bankruptcy Code or any order of the Bankruptcy Court, provided that no
objection to the allowance of such Claim or motion to expunge such Claim has
been interposed before the Claims Objection Deadline; or (b) any Claim or
Interest scheduled by the Debtor and not scheduled as “disputed.”
4. Ballot means the form
distributed to each holder of an impaired Claim or Interest on which is to be
indicated acceptance or rejection of the Plan.
5. Bankruptcy Code means
title 11 of the United States Code, as amended from time to time, as applicable
to the Case.
6. Bankruptcy Court
means the United States Bankruptcy Court for the District of
7. Bankruptcy Rules
means the Federal Rules of Bankruptcy Procedure as promulgated by the United
States Supreme Court under section 2075 of title 28 of the United States Code,
and any Local Rules of the Bankruptcy Court.
8. Bar Date means the
date by which all Claims were required to be filed with the Bankruptcy
9. Business Day means
any day other than a Saturday, Sunday or any other day on which commercial banks
in the city of Las Vegas Nevada are required or authorized to close by law or
10. Cash means legal
tender of the United States of America, which may be conveyed by check or wire
11. Case means the
reorganization proceedings of the Debtor under Chapter 11 of the Bankruptcy
Code, administered as Case No. BK-S-05-19263-BAM.
Claim has the
meaning set forth in section 101 of the Bankruptcy Code.
13. Claim Payment Date
means, in respect of an Allowed Claim, the later of the Effective Date or the
date such Claim becomes Allowed Claim.
14. Claims Objection
Deadline means five (5) business days after the later of: (i) entry of
the Confirmation Order; or (ii) expiration of the Bar Date.
15. Class means a
category of holders of Claims or Interests as set forth in Article II of the
16. Collateral means any
property or interest in property of the estate of the Debtor subject to a Lien
to secure the payment or performance of a Claim, which Lien is not subject to
avoidance under the Bankruptcy Code or otherwise invalid under the
Bankruptcy Code or applicable state law.
17. Confirmation Date
means the date on which the Clerk of the Bankruptcy Court enters the
Confirmation Order on the docket.
18. Confirmation Hearing
means the hearing held by the Bankruptcy Court to consider confirmation of the
Plan pursuant to section 1129 of the Bankruptcy Code, as such hearing may be
adjourned or continued from time to time.
19. Confirmation Order
means the order of the Bankruptcy Court confirming the Plan pursuant to section
1129 of the Bankruptcy Code.
20. Disputed Claim means
a Claim against any Debtor to the extent that such Claim is not
21. Effective Date means
the first Business Day on which the conditions specified in Section 7.4 of the
Plan have been satisfied or waived.
22. Existing Ownership
Interests means the stock and/or other ownership interests of the Debtor
issued and outstanding immediately prior to the Effective Date.
23. Final Order means an
order of the Bankruptcy Court as to which the time to appeal, petition for
certiorari or move for reargument or rehearing has expired and as to which no
appeal, petition for certiorari or other proceedings for a reargument or
rehearing shall then be pending or as to which any right to appeal, petition for
certiorari, reargue, or rehear shall have been waived in writing in form and
substance satisfactory to the Debtor or the Reorganized Debtor or, in the
appeal, writ of certiorari, or reargument or rehearing thereof has been sought,
such order of the Bankruptcy Court shall have been determined by the highest
court to which such order was appealed, or certiorari, reargument or rehearing
shall have been denied and the time to take any further appeal, petition for
certiorari or more for reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure, or Rule 9023 or Rule 9024 of the Bankruptcy
Rules, may be filed with respect to such order shall not cause such order not to
be a Final Order.
24. Interest means,
collectively, any shares of stock or other instrument evidencing an ownership
interest in the Debtor and any option, warrant or right, contractual or
otherwise, to acquire an ownership interest in the Debtor.
25. Lien has the meaning
set forth in section 101 of the Bankruptcy Code.
Claims means those causes of action and/or potential causes of
action belonging to the Debtor and described specifically in Schedule 1
27. Reorganized Debtor
means Secured Diversified Investment, Ltd. on and after the Effective
28. New Stock means the
4,000,000 shares of voting common stock in the Reorganized Debtor to be issued
and distributed to holders of Allowed Class 3 Claims pursuant to the terms of
29. Person means an
individual, corporation, partnership, governmental unit, joint venture,
association, joint stock company, limited liability company, limited liability
partnership, trust, estate, unincorporated
or other entity.
30. Petition Date means
June 16, 2008, the date on which the Debtor commenced the Case.
31. Plan means this
chapter 11 plan of reorganization, including, without limitation, all exhibits,
supplements, appendices and schedules hereto, either in its present form or as
the same may be altered, amended or modified from time to time.
32. Plan Proponents means
the debtor-in-possession, Secured Diversified Investment, Ltd., and creditor
Cane Clark LLP.
33. Priority Claim means
any Claim entitled to priority pursuant to sections 507(a)(2) through (7) and
507(a)(9) of the Bankruptcy Code.
34. Priority Tax Claim
means any Claim of a governmental unit of the kind specified in sections 502(i)
and 507(a)(8) of the Bankruptcy Code.
35. Pro Rata Share means
a proportionate share, so that the ratio of the consideration distributed on
account of an Allowed Claim or Allowed Interest in a Class to the amount of such
Allowed Claim or Allowed Interest is the same as the ratio of the amount of the
consideration distributed on account of all Allowed Claims or Allowed Interests
in such Class to the amount of all Allowed Claims or Allowed Interests in such
36. Reorganized Debtor's
Articles of Incorporation means with respect to Reorganized Debtor, the
Amended and Restated Articles of Incorporation, as the case maybe, of such
37. Schedules means the
schedules of assets and liabilities, the list of holders of Interests and the
statements of financial affairs filed by the Debtor under section 521 of the
Bankruptcy Code and Bankruptcy Rule 1007, and all amendments and modifications
thereto through the Confirmation Date.
38. Secured Claim means
the portion of any Claim, determined in accordance with section 506(a) of the
Bankruptcy Code and Bankruptcy Rule 1007, and all amendments and modifications
thereto through the Confirmation Date.
39. Computation of Time.
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.
OF CLAIMS AND INTERESTS
The following is a designation of the
Classes of Claims and Interests classified under this Plan. A Claim
or Interest shall be deemed classified in a particular Class only to the extent
Interest qualifies within the description of that Class and shall be deemed
classified in a different Class to the extent that any remainder of the Claim or
Interest qualifies within the description of such different Class. In
accordance with section 1123(a)( 1) of the Bankruptcy
Administrative Claims and Priority Tax Claims have not been classified but the
treatment for such unclassified claims is set forth in Article III.
Claims. All claims of a kind specified under Section 507(a)(l) of the
Priority Tax Claims.
All claims, if any, of a kind specified under Section 507(a)(8) of the
Late Filed Claims.
All claims, if any, filed after the Bar Date.
against, and Interests in, the Debtor are classified in the Classes listed
Claims — Priority Claims. Class 1 Claims shall consist of all Priority
Claims — Secured Claims. Class 2 shall consist of all Secured
Claims — General Unsecured Claims. Class 3 shall consist of all
General Unsecured Claims.
Class 4 —
Interests. Class 4 consists of all Interests in the Debtor.
OF CLAIMS AND INTERESTS
The following is a designation of the
treatment to be accorded to each Class of Claims and Interests denominated in
this Plan. The treatment of a consideration to be provided on account of Claims
and Interests pursuant to the Plan shall be in full settlement, release and
discharge of such Claims and Interests; provided, that such discharge shall not
affect the liability of any other entity to, or the property of any other entity
encumbered to secure payment to, the holder of any such Claim or Interest,
except as otherwise provided in this Plan; and provided, further, that such
discharge shall not affect the Reorganized Debtors' obligations under the
Claim shall entitle the holder thereof to a distribution of cash or securities
or to other consideration pursuant to this Plan unless, and only to the extent
that, such Claim is an Allowed Claim. Except as hereinafter specially
provided, all distributions of cash or securities on account of Allowed Claims
shall be made on the applicable Claim Payment Date or as soon as practicable
Claims. Unless otherwise agreed by the holder of an Administrative Claim
(in which event such other agreement shall govern), each holder of an Allowed
Administrative Claim shall receive (a) on the applicable Claim Payment Date,
Cash in an amount equal to such Allowed Administrative Claim or (b) at the
option of the particular Reorganized Debtor, payment in accordance with the
ordinary business terms which have prevailed between such Debtor and the holder
of such Allowed Administrative Claim; provided that any Allowed Administrative
Claim against a Debtor which is contingent or unliquidated shall be assumed by
such Reorganized Debtor and satisfied in full when it becomes noncontingent and
3.2 Priority Tax Claims.
Unless otherwise agreed by the holder of an Allowed Priority Tax Claim (in which
event such other agreement shall govern), each holder of any Allowed Priority
Tax Claim shall receive on the applicable Claim Payment Date, Cash equal to the
amount of such Allowed Priority Tax Claim.
3.3 Late Filed
Claims. Late filed claims shall receive no distribution under
3.4 Class 1 — Priority
Each Allowed Claim in Class 1 shall be paid in full in Cash on the applicable
Claim Payment Date.
(b) Impairment. Class
1 Claims are unimpaired and will not vote on the Plan.
3.5 Class 2 — Secured
The legal, equitable and contractual rights to which each holder of an Allowed
Claim in Class 2 is entitled shall be left unaltered or, at the option of the
Reorganized Debtor, shall be left unimpaired in the manner described in section
1124(2) of the Bankruptcy Code.
(b) Impairment. Class
2 Claims are unimpaired and will note vote on the Plan.
3.6 Class 3 — General Unsecured
Treatment. A holder of any Allowed Class 3 Claim shall receive its Pro-rata
shares of the New Stock on the applicable Claim Payment Date.
(b) Impairment. Class 3 claims are impaired and Allowed Class 3 Claims will vote
on acceptance or rejection of the Plan. Class 3 claims which are
Disputed Claims will vote on acceptance or rejection of the Plan if such claims
have, pursuant to F.R.B.P. 3018(a), obtained an order from the Bankruptcy Court
temporarily allowing such claim(s) for the purpose of accepting or rejecting the
3.7 Class 4 —
All currently existing Interests in the Debtor shall be
Class 4 Interests are impaired under the Plan. The holders of Class 4 Interests,
however, shall receive no property on account of such
interests. Accordingly, such holders are deemed to have rejected the
Plan pursuant to Section 1126(g) of the Bankruptcy Code and will not vote on the
OF THE DEBTORS' EXECUTORY CONTRACTS AND UNEXPIRED LEASES
4.1 Rejection of Executory
Contracts. Each executory contract or unexpired lease of
Debtor that has not expired by its own terms prior to the Effective Date, has
not been assumed during the Case prior to Confirmation, is not proposed to be
assumed under the Plan and is not subject to a motion for assumption filed at
least ten (10) days prior to the Confirmation Date, shall, by the terms of this
Plan, be deemed rejected on the Effective Date .
4.2 Claims for Rejected
Contracts and Leases. Except as otherwise provided in any order of the
Bankruptcy Court, any claims for damages arising from the rejection by the
Debtor of an executory contract or unexpired lease not filed on or prior to the
Confirmation Date must be filed within 15 days after the earlier of (i) the
entry of the order approving rejection of such executory contract or unexpired
lease and (ii) the Confirmation Date. Such claims will be classified
and treated as Class 3 Claims. Any such Claims not filed within such 15-day
period shall be banned and may not thereafter be asserted.
4.3 Postpetition Contracts and
Leases. All contracts and leases entered into or assumed by the Debtor
after the Petition Date shall be retained by such Reorganized Debtor on the
EXCHANGE WITH GALAXY GAMING, INC.; DISTRIBUTION OF NEW STOCK
5.1 Consummation of Share
Within five (5) days of the Effective
Date, the Reorganized Debtor shall consummate the share exchange transaction
with Galaxy Gaming, Inc. as documented in the Share Exchange Agreement attached
hereto as Attachment
5.2 Share Exchange Agreement a
Exchange Agreement attached hereto as Attachment A represents a binding
agreement between Galaxy Gaming, Inc. and the Reorganized Debtor
5.3 Distribution of New Stock To
Holders of Allowed Class 3 Claims.
applicable Claim Payment Dates, each holder of an Allowed Class 3 Claim shall be
issued it Pro Rata Share of 4,000,000 shares of the New Stock. In
calculating the number of shares of New Stock to be issued to each such
claimant, the Pro Rata Share figures for each Allowed Class 3 Claim shall be
rounded to the nearest whole number and fractional shares shall not be
The distribution of New Stock to
holders of Allowed Class 3 Claims as called for under this Plan shall be exempt
from the registration requirements of the Securities Act of 1933 (15
U.S.C. §77a et seq.) and from the registration requirements of any
applicable federal, state or local laws pursuant to the provisions of Section
1145(a)(1) of the United States Bankruptcy Code.
5.4 Other Cash Payments.
The Debtor shall, on the applicable Claim Payment Dates, pay each Allowed
Administrative Claim, Allowed Priority Tax Claim, and Allowed Priority
GOVERNANCE AND OTHER TRANSACTIONS
6.1 Cancellation of Existing
Ownership Interests. On the Effective Date, all Existing
Ownership Interests in Secured Diversified Investment, Ltd. shall be cancelled
and rendered null and void.
6.2 Revesting and Transfer of
Assets. Except as otherwise provided in this Plan, on
the Effective Date, all property of the estate, to the fullest extent of section
541 of the Code, and any other rights and assets of Debtor of every kind and
nature shall, revest in the Reorganized Debtor
clear of all Liens, Claims and Interests other than those Liens, Claims and
Interests retained or created pursuant to this Plan
6.3 Amended Articles of
Incorporation and Corporate Governance.
of Incorporation. The Articles of Incorporation of the Debtor shall be amended
and restated as set forth in Exhibit A to the Share Exchange Agreement. The
amended and restated Articles of Incorporation shall contain a provision
prohibiting the issuance of nonvoting equity securities.
of Directors and Officers For Reorganized Debtor. Upon consummation
of the Share Exchange Agreement, the officers and directors of the Reorganized
Debtor shall be the individuals set forth in Exhibit C to the Share Exchange
(c) Discharge. On
the Effective Date, the Debtor shall be discharged from any and all Claims
against and Interests in the Debtor, to the fullest extent provided in sections
524 and 1141 of the Bankruptcy Code.
OF CLAIMS; EFFECTIVE DATE
7.1 Administrative Claims Bar
Date. All requests for payment of administrative costs and
expenses incurred prior to the Effective Date pursuant to section 507(a)(1) or
503(b) of the Bankruptcy Code shall be served on the Reorganized Debtor and
filed with the Bankruptcy Court no later than 30 days after the Confirmation
Date. Any such Claim that is not served and filed within this time
shall be forever barred.
7.2 Procedures For Determination
of Claims and Interests
(i) Notwithstanding the
occurrence of the Confirmation Date, and except as to any Claim that has
otherwise been Allowed, the Reorganized Debtor and/or any other party in
interest may object to the allowance of any Claim. Objections must be filed no
later than the Claims Objection Deadline. No distribution shall be made on
account of any Claim that is not Allowed unless or until such claim becomes and
as otherwise provided herein, no Claim shall be entitled to receive
7.3 Unclaimed Property.
All property that is unclaimed for one year after distribution thereof by mail
to the latest mailing address filed of record with the Bankruptcy Court for the
party entitled thereto or, if no such mailing address has been so filed, the
mailing address reflected in the Schedules shall become property of the
Occurrence of Effective Date. Each of the following are conditions to the
Confirmation Order shall have been entered by the Bankruptcy Court, more than
ten (10) days shall have elapsed since the Confirmation Date, no stay of the
Confirmation Order shall be in effect and the Confirmation Order shall not have
been reversed, modified or vacated. Plan Proponent, in its sole
discretion, may waive the foregoing condition, such waiver to be effective only
if in writing and filed with the Court.
Confirmation. As to any Class that votes to reject the Plan and/or which
is deemed to have rejected the Plan, Proponent is seeking confirmation of the
Plan in accordance with section 1129(b) of the Code either under the terms
provided herein or upon such terms as may exist if the Plan is modified in
accordance with section 1127(d) of the Code.
8.1 Retention of
Jurisdiction. Following the Effective Date, the Bankruptcy Court shall
retain jurisdiction for the following purposes:
determine the allowability, classification, priority or subordination of Claims
and Interests upon objection, or to estimate, pursuant to section 502(c) of the
Code, the amount of any Claim that is or is anticipated to be contingent or
unliquidated as of the Effective Date, or to hear proceedings to subordinate
Claims or Interests brought by any party in interest with standing to bring such
objection or proceeding.
construe and to take any action authorized by the Bankruptcy Code and requested
by the Reorganized Debtor or any other party in interest to enforce this Plan
and the documents and agreements filed in connection with this Plan and issue
such orders as may be
for the implementation, execution and consummation of this Plan.
determine any and all applications for allowance of compensation and expense
reimbursement from the Debtor or the Reorganized Debtor for periods on or before
the Effective Date, and to determine any other request for payment of
determine all matters that may be pending before the Bankruptcy Court on or
before the Effective Date.
resolve any dispute regarding the implementation or interpretation of this Plan
that arises at any time before the Case is closed, including the scope and
nature of the Reorganized Debtor's obligations to cure defaults under assumed
contracts, leases, franchises and permits.
determine any and all applications pending on the Confirmation Date for the
rejection, assumption or assignment of executory contracts or unexpired leases
entered into prior to the Petition Date, and the allowance of any Claim
determine all applications, adversary proceedings, contested matters and other
litigated matters that were brought or that could have been brought on or before
the Effective Date.
determine matters concerning local, state and federal taxes in accordance with
sections 346, 505, and 1146 of the Code, and to determine any tax claims that
may arise against the Debtor or Reorganized Debtor as a result of the
transactions contemplated by the Plan.
determine such other matters as may be provided in the Confirmation
approve any modification of this Plan pursuant to section 1127 of the Code, or
to remedy any apparent nonmaterial defect or omission in this Plan, or to
reconcile any nonmaterial inconsistency in this Plan so as to carry out its
intent and purposes, and
such other purposes as may be provided for in the Confirmation
the Effective Date, the Bankruptcy Court shall retain jurisdiction with respect
to each of the foregoing items and all other matters that were subject to its
jurisdiction prior to the Confirmation Date.
8.2 Payment of Fees Due Under 11
U.S.C. §1930(a)(6). The Debtor and the Reorganized
Debtor shall timely pay to the Office of the United States Trustee all fees due
under the terms of 11 U.S.C.
§1930(a)(6). This obligation is not subject to the Administrative
Claims Bar Date as
herein, it shall not be subject to any discharge of liabilities provided by the
terms of this Plan and/or the Bankruptcy Code.
Binding. On the Effective Date, all provisions of this
Plan, including all agreements, instruments and other documents filed pursuant
to this Plan and executed by the Reorganized Debtor in connection with this
Plan, shall be binding upon the Reorganized Debtor, all Claim and Interest
holders and all other entities that are affected in any manner by the
Plan. All agreements, instruments and other documents filed in
connection with the Plan shall have full force and effect, and shall bind all
parties thereto as of the Effective Date, whether or not such exhibits actually
shall be executed by parties other than the Reorganized Debtor, or shall be
issued, delivered or recorded on the Effective Date or thereafter.
8.4 Postconsummation Effect of
Evidences of Claims or Interests. Notes, stock
certificates and other evidence of Claims against or Interests in the Debtor
shall, effective from and after the Effective Date, represent only the right to
participate in the distributions contemplated by the Plan.
Dates. Whenever any payment to be made under this Plan is due
on a day other than a Business Day, such payment shall instead be made, without
interest, on the next succeeding Business Day.
8.6 Retention and Enforcement of
Causes of Action. Pursuant to section 1123(b)(3)(B) of the
Code, but subject to Section 8.3 hereof, the Debtor and the Reorganized Debtor
shall retain all causes of action that the Debtor had or had power to assert
immediately prior to the Effective Date, specifically including, but not
necessarily limited to, the Litigation Claims. Debtor and the
Reorganized Debtor may commence or continue in any appropriate court or tribunal
any suit or other proceeding for the prosecution and/or enforcement of the
Litigation Claims and/or any other causes of action. All causes of
action that the Debtor had or had power to assert immediately prior
to the Effective Date, specifically including, but not necessarily limited to,
the Litigation Claims, shall remain the property of the Debtor and the
8.7 Successors and
Assigns. The rights, benefits and obligations of any person
named or referred to in this Plan shall be binding upon, and shall inure to the
benefit of, the heir, executor, administrator, successor or assignee of such
8.8 Inconsistencies. In
the event that there is any inconsistency between this Plan and the Disclosure
Statement, any exhibit to the Plan or any other instrument or document created
or executed pursuant to the Plan, this Plan shall govern.
Law. Except to the extent that the Code or any other
federal law is applicable or to the extent the law of a different jurisdiction
is validly elected by the Debtor, the rights, duties and obligations arising
under this Plan shall be governed in accordance with the substantive laws of the
United States of America and, to the extent federal law is not applicable, the
substantive laws of the State of Nevada.
Schedule 1 –
claims and causes of action against Home Eq, Fidelity National Asset Management,
and their respective affiliated and/or subsidiary companies, employees, agents,
representatives, subsidiaries, successors, assigns, tenants, licensees,
invitees, and related persons, predecessors, entities or companies related to or
arising out of such parties foreclosure upon real property and related actions
taken in violation of the automatic stay provided under Section 362 of the Code,
as well as claims and causes of action against such parties related to or
arising out of their destruction of the personal property of the Debtor located
with such real property.
claims and causes of action against Clifford L. Strand for breach of contract,
unjust enrichment, defamation, libel, intentional interference with economic
advantage, and intentional interference with business and/or contractual
relations, arising from or related to such party’s statements regarding the
Debtor made after the filing of the involuntary petition